IPMI Inflation in Indonesia

Indonesia had a significant jump in IPMI inflation rate over the past year. After having the lowest IPMI inflation rate worldwide in 2014 (6.3%), Indonesia has risen to have the top inflation rate among the low-cost Asian countries with a rate of 9.1%. However, it should be noted that Indonesia’s IPMI inflation rate is still below that of the high-cost Asian countries China, Hong Kong and Singapore, which have a 9.5% rate. Interestingly, the IPMI inflation rate in Indonesia is actually the closest to the Consumer Price Inflation seen in the country in recent years, 6.74% as of March 2015, and like the other low-cost Asian countries, it appears that IPMI inflation has not followed the same Consumer Price Inflation trend in recent years. This tells us that IPMI providers have probably grouped the plans they offer in Indonesia together with other similar countries and offered the same premium, which means IPMI inflation in Indonesia will follow global IPMI trends rather than the consumer price inflation in the country.

Last year, we predicted that a growing Indonesian economy would begin an influx of foreign investment and bolster the number of expats heading to the country. The resulting demand created seems to already be having an effect on IPMI premiums. Combine this with the new universal health initiative and we expect to see IPMI inflation figures continue to rise with Indonesia continuing to lead IPMI inflation in low-cost Asia.